Finance Minister Malusi Gigaba is expected to deliver the budget speech this afternoon. Let us look at some figures brandished last year so we are able to see if there has been a review, revised or improved economic milieu.
Former minister Pravin Gordhan announced in 2017 that government’s expectation was that GDP growth would increase from 0.5 per cent in 2016 to 1.3 per cent in 2017. Gordhan also expressed optimism it “will continue to improve moderately over the medium term”.
The services sector was announced as the main contributor to growth in 2016, “bringing nearly 120 000 new work opportunities”.
“Mining continued to underperform while manufacturing output was supported by buoyant sales in petrochemicals, food and beverages and motor vehicles. Mining and manufacturing employment declined by 80 000 jobs in 2016,” Gordhan said.
He also cited “weak business confidence and low levels of profitability” and its impact on “on investment across all sectors.”
He warned that “though the policy interest rate had increased by 2 percentage points since 2014, inflation ended the year above the target, with food prices continuing to reflect the impact on agriculture of poor rainfall”.
“Lower growth in our trading partners in Africa and elsewhere has contributed to sluggish export earnings. We expect somewhat higher growth in the coming year on the strength of a number of favourable trends. Commodity prices have rebounded and the exchange rate has recovered from its rapid depreciation last year, which bodes well for capital flows, inflation and business and consumer confidence,” Gordhan announced.
The 2017 budget allocated funds over the Medium Term Expenditure Framework (MTEF) period to support economic growth in various programmes
R3.9 billion was allocated towards small, medium and micro enterprises and cooperatives, R4.2 billion went towards industrial infrastructure in special economic zones and industrial parks and R1.9 billion was earmarked for broadband implementation
R3.9 billion was given to the Council for Scientific and Industrial Research (CSIR), additional R494 million going towards tourism promotion and R266 million was meant to support the aquaculture sector and realise the goals of the Oceans Economy Phakisa Operation.
Spending on agriculture, rural development and land reform amounting to nearly R30 billion by 2019/20 with Gordhan emphasising that “effective implementation of these and other programmes and initiatives will set us on a higher growth trajectory than currently projected.”
“To ensure a balanced and sustainable recovery, we indicated in the Medium Term Budget Policy Statement that we would raise an additional R28 billion in tax revenues”, Gordhan said.
Governnemt planned to reduce spending by a total of R26 billion over the next two years with the proposed expenditure for 2017/18 totaling R1.56 trillion.
Interest on debt amounted to R169 billion, projected revenues amounted to R1.41 trillion and thhe balance of R149 billion, or 3.1 per cent of GDP, was to be borrowed. In total, government debt now stood at R2.2 trillion, or 50.7 per cent of GDP.